India’s Supreme Court has determined that skill-based activities such as poker, fantasy sports and rummy should be classified as gambling for tax purposes and therefore should fall under the country’s Goods and Services Tax (GST) rate of 28%.
The court has also supported the government’s stance that the retrospective application of GST means taxpayers must pay taxes on their total amount wagered versus the revenue they receive from betting activities.
This decision enables tax authorities to recover tax receipts going back before the 2023 GST law was enacted. Estimates published by local news sources indicate that the total amount of liability in the gaming industry is approximately $14 billion.
The court stated that neither skill or luck determine whether or not a bet is considered betting or gambling; but rather betting and gambling involve an uncertainty with respect to future outcomes and placing a monetary wager on those uncertainties.
There are many online gaming operators who argue against the classification of a game of skill as gambling and disagree with the retrospective application of the 28% GST.
These companies also expressed concern that if skills games are treated like gambling, their future business could be adversely impacted.
However, the Supreme Court stated that the GST regime was not arbitrary or unconstitutional.
